Telcos, Oil& Gas Listing Will Deepen Capital Market – Sotubo | Independent Newspapers Limited
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Telcos, Oil& Gas Listing Will Deepen Capital Market – Sotubo

Posted: Aug 5, 2015 at 12:26 am   /   by   /   comments (0)

Mr. Dele Sotubo is the Chief Executive Officer (CEO) of Stanbic IBTC Stockbrokers. In this interview with journalists, he discusses critical issues in the capital market and the company’s efforts in attracting interest in the market. Our Correspondent, Bamidele Ogunwusi was there. Excerpts:

There have been agitations for multinational oil and gas companies and telecoms giants to list on the Nigerian Stock Exchange. What efforts are market operators like your company making to encourage them to list on the Nigerian Stock Exchange?

The listing of these companies will help deepen the capital market. The regulators and operators are currently in discussion with government on the best way to ensure that these companies list on The Exchange to help deepen the market. Beyond that, we will continue to play an active role in listing such companies on the NSE. The listing of SEPLAT, an oil and gas company, on the NSE, is a clear example of our contribution, as financial services group, to deepening the NSE.


Investor confidence continues to be a major issue since the market crash of 2008. Reports suggest that over N793 billion was pulled out of the market by foreign investors in 2014. What do you suggest need to be in place to sustain the interest of local investors?

Restoring confidence in the market after the global melt down will be a gradual process as activities in the equities market is cyclical. Foreign investment withdrawal from the market in 2014 was largely as a result of Macros fall in oil prices and currency devaluation and exchange rate instability.

Improved macro-economic situation will galvanise investors’ interest and boost retail investors’ confidence in the market. The increase in the number of more sophisticated domestic investors such as pension and asset management and insurance companies should drive participation in the medium to longer-term. We believe that the increase in retail investment products such as ETFs will also encourage retail investors’ participation.


The current reforms in the economy, particularly in power and agriculture, have helped to position Nigeria as an investment haven. Are investors showing strong appetite for opportunities in these sectors?

With the recent GDP rebasing and the reforms around the power sector, we see strong appetite from investors, perhaps not on the stock market now. However, investors have shown increased interest in partnering with Nigerians on power projects and, to a large extent, agricultural transformation.

The challenging macro-economic environment is likely to slow down the pace of investment on that front as many players wait on the side-lines until the elections are well out of the way and the uncertainty around the fiscal operations of government has been eased.


In the last decade, technology has redefined the operations of the capital market. How do you see technology shaping the stockbrokerage business in the next decade?

The interesting thing about technology is that it fosters efficiency and productivity. It also drives transparency in the capital market. This can also be a mode through which retail investors can be attracted into the market. Many Nigerians using mobile devices can now have access to put their trades through the market. With the introduction of Direct Market Access (DMA) and other similar initiatives, we expect that this will help to improve participation of investors in the capital market.


There seems to be a general disposition by Pension Funds Administrations (PFAs) to Federal Government securities as about 40 per cent of PFA’s investments are skewed in that direction, followed by money market instruments. Investment in the capital market is considerably less. Which factors, in your opinion, other than regulation, could determine these investment decisions?

Apart from the perceived low risk appetite of PFAs, which is understandable when we consider the adverse effects of the 2008 stock market crash on portfolio investors, we also believe that the limited number of high quality liquid stocks reduce their options. Lack of depth in the Nigerian market makes the available options limited.

The preference for capital preservation and guaranteed money market yields also contribute to the low risk appetite for equities. Part of the regulation also requires pension funds to report returns on an annual basis, which discourages them from taking the long term view on investments.

We expect the listing of more quality companies as reforms in sectors such as the power, oil and gas, telecommunication and agriculture increase demand for capital.


Stanbic IBTC Holdings has positioned itself as a financial supermarket, with interests in several sectors of the economy, including stockbrokerage. As a subsidiary of Stanbic IBTC Holdings, are you benefiting from cross-selling of solutions?

Certainly, Stanbic IBTC Stockbrokers Limited is a member of the Stanbic IBTC Holdings, a full financial services group with a clear focus on three main business pillars – Corporate and Investment Banking, Personal and Business Banking and Wealth Management. We look to leverage on the group’s African and global footprint to attract the biggest clients into the Nigerian Capital markets.